Thursday, 28 August 2014

What is the Supply Chain and how is it Structured?

The supply chain includes everything from the basic commodities to the end product that goes to the customer and even beyond to the recycling of the product. There is a flow of materials that has to be managed, taking raw materials and turning them into a product that then goes to the consumer. The supply chain involves a series of partners who each play an important role in the movement of the materials and products. Each of these partners in the supply chain goes through their processes and focus on adding value to the product.

The structure of the supply chain varies but it involves a number of links that ensure the raw materials make it to the customer. For an example the supply chain of cheese involves:
  • The dairy that gets the milk from the cow and ship the raw material to the factory.
  • The cheese factory turns the raw material into the product to the national distribution centre where it could be stored for months.
  • When an order comes into the distribution centre the product is then shipped to the store.
  • Once at the store the product is then purchased by the end consumer who may buy it in person or order it to be delivered.
The first two links concern inbound logistics, the distribution centre is the internal logistics and the second two links are the outbound logistics and as a whole they make up the supply chain.

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